#6377
[Second Issue of the Day]
#2
BBC
29 July 2002
The new face of Russian business
By Leonid Fink
BBC Russia business analyst
The new generation of Russian entrepreneurs are rich, strong and eager to maintain law and order. But their past may be shrouded in tactful mystery, as Leonid Fink explains with the help of fictitious characters drawn from his own experience of the country.
Meet Mr Yegor Kudrinsky, an honourable businessman, the owner of 'Signor Pomidor', a vast supermarket chain in St Petersburg and neighbouring regions, as well as of a wholesale market and a meat processing plant.
If you have good quality food or consumer goods to sell at the right price, he is certainly your man.
Kudrinsky will impress you with his quick mind and thorough knowledge of trade legislation.
His high level contacts within the city authorities, law-enforcement agencies and even in government offices in Moscow will not escape your attention either.
Do you need an interpreter?
No problem, Mr Kudrinsky's charming and well-mannered 17-year-old daughter Olga is just back from a prestigious public school in England.
Well, maybe his strong athletic physique, a pretentious Versace suit - a little bit over the top for a casual businessman - and gleaming of a thick golden chain on his neck will make you feel a little uncertain?
In the past?
If it does, and you start making enquiries, you will soon learn that less than 10 years ago your new partner was better known in St Petersburg as Gosha-Payalnik or Gosha - the Soldering Iron - the infamous weapon of torturing and extorting money or property by racketeers. (All personal details here are fictitious and serve only as an example).
Your sources will not be clear whether he has actually used the weapon, but they are pretty confident that until the mid-nineties Mr Kudrinsky had run a protection racket gang in St Petersburg.
He has never been convicted, although in 1992 the city Prosecution Office charged him with kidnapping and torturing a businessman - his competitor for the purchase of a privatised mechanical plant, later turned wholesale market.
The case collapsed when the victim suddenly withdrew his evidence and apologised.
Now, is it safe to do business with Mr Kudrinsky?
Safe but ethical?
Well, it may be quite safe.
Mr Kudrinsky is already a rich man, he runs legitimate businesses, he does not need to steal your money, he is seeking respect and honour, showering charity organisations with donations.
The ethical side is another matter.
After all you have learned about him, do you still want to deal with the man, meet him, ring him up on a daily basis? Drink single malt whiskey or old cognac with him (an important ceremony in business partnership)?
You know, Mr. Kudrinsky is frank but somewhat shy when it comes to discussing his past.
They call it "initial accumulation of capital". And this story is part of a broader picture.
Playing the game
Are you looking for a strong, rich business partner in Russia? Do you really believe that it is possible to start from scratch and go on to build a multi-million dollar empire in about a decade without breaking the law in a poverty-stricken country?
The capital accumulation game was a wild one.
Some people died, some gave up and left the stage, some are still doing prison terms, and some are meeting you in their luxurious offices, discussing business.
And now the game is over.
The corruption is still very much evident and foreign investors' rights are neglected in many cases, but the trend has changed.
The new class of wealthy entrepreneurs and their families are very much interested in preserving law and order.
Police and secret services are once again strong and armed with sweeping powers.
Attracting business
It is probably safer than ever to do business with Russia, and it is profitable. Last year it was the best performing market in the world.
With the western economies convulsing as they are, it is almost certain to repeat the record this year.
The consumer market is booming. Years after the currency chaos, Russian consumers are still not used to set aside money in savings accounts - they take all their earnings to shops.
You can also travel there and be confident that you come back in one piece, with your wallet still in your pocket.
You can even have a great time there: restaurants, nightclubs, bars with live music are busy throughout the night, and they are incredible.
But still, after meetings with the people in Versace suits, sometimes you can't sleep at night. You know what I mean.
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